EvidenceProf Blog

Editor: Colin Miller
Univ. of South Carolina School of Law

Thursday, September 1, 2011

(Not To) Burst Your Bubble: 3rd Circuit Finds District Court Erred In Applying Rule 301 In Mortgage Cancelling Appeal

Federal Rule of Evidence 301 provides that

In all civil actions and proceedings not otherwise provided for by Act of Congress or by these rules, a presumption imposes on the party against whom it is directed the burden of going forward with evidence to rebut or meet the presumption, but does not shift to such party the burden of proof in the sense of the risk of nonpersuasion, which remains throughout the trial upon the party on whom it was originally cast.

So, what does it take for a party to to detroy the presumption prescribed by Rule 301? According to the recent opinion of the Third Circuit in Cappuccio v. Prime Capital Funding LLC, 2011 WL 3584323 (3rd Cir. 2011), the answer is "not much."

In Cappuccio

Appellant Karen Cappuccio appeal[d] an unfavorable jury verdict on her complaint under the Truth In Lending Act (“TILA”), 15 U.S.C § 1601 et seq., against Appellee E*Trade for its failure to properly notify her of her right to cancel her home mortgage. Cappuccio challenge[d] various aspects of the jury instructions, including the District Court's directive that because her signature was on the notice of right to cancel, "something more than just [her] testimony...[wa]s needed to rebut the presumption that she received" the notice. 


Cappuccio sought to prove that she did not receive the notices of her right cancel at the closing, and further, that to the extent she did receive the notices in the mail after the closing, they were not clear and conspicuous because they listed the wrong final rescission date and because they were received only after the loan funds had been disbursed, thus triggering a three-year extension of her right to rescind the mortgages.

As noted, though, the district court instructed the jury that "[i]n a TILA case, something more than just the testimony of the borrower is needed to rebut the presumption that she received two copies of the Notice."

In addressing Cappuccio's appeal, the Third Circuit cited the aforementioned language of Federal Rule of Evidence 301 and determined that it stood for the proposition that "unless Congress or the Rules of Evidence provide otherwise, 'a presumption in a civil case imposes the burden of production on the party against whom it is directed, but does not shift the burden of persuasion.'" And, "[u]nder this theory, called the 'ThayerWigmore 'bursting bubble' theory of presumptions[,]...'the introduction of evidence to rebut a presumption destroys that presumption, leaving only that evidence and its inferences to be judged against the competing evidence and its inferences to determine the ultimate question at issue.'"


the quantum of evidence needed to "burst" the presumption's "bubble" under Rule 301 is also minimal, given that "the presumption's only effect is to require the party [contesting it] to produce enough evidence substantiating [the presumed fact's absence] to withstand a motion for summary judgment or judgment as a matter of law on the issue."....We have previously held that a single, non-conclusory affidavit or witness's testimony, when based on personal knowledge and directed at a material issue, is sufficient to defeat summary judgment or judgment as a matter of law....This remains true even if the affidavit is "self-serving" in the sense of supporting the affiant's own legal claim or interests....Here, Cappuccio's testimony related directly to a material issue in her TILA claim: whether she received two copies of a notice of the right to rescind her First Magnus loan when she left Krajczar's house on the night of the closing. Her testimony was also obviously based on her personal knowledge and was in no way conclusory.

Thus, the Third Circuit had no problem concluding that "under Rule 301, [Cappuccio]'s testimony would appear to be sufficient to burst the presumption's bubble, leaving the decision of whether to credit her testimony, or that of E*Trade's witnesses, to the jury." Finally, because Congress did not through any Act "otherwise provide[]" for a stronger burden than the one provided by Rule 301, the court could conclude "that the testimony of a borrower alone is sufficient to overcome TILA's presumption of receipt." 



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